The Consumer Electronics Show (CES) this year attracted 153k attendees (10% increase over last year), with 34K attendees being international. This was another event that showcased the continuing evolution of consumer electronic devices rather than anything revolutionary. Mobility and internet connectivity dominated the exhibits. My focus continues to be on the implications of these themes on our SaaS, adtech, mobility and big data strategies. Google’s influence was felt strongly this year both because of Motorola’s presence but also because of the incorporation of Android in many mobile devices and TVs, and so was Apple’s based on the number of iOS peripheral devices that were demonstrated. In other words, the two companies continue to be the front runners in ecosystems.

Themes of Interest

Mobility. Manufacturers tried to differentiate their mobile offerings in two ways: a) by introducing new form factors (Samsung offers several smartphones with 4.3” screens, a 5” tablet, called the Galaxy Note, and 7” and 10” tablets also under the Galaxy brand) that also carry different price points, b) by making small modifications to the Android operating system which most of these devices run, and c) by incorporating technologies from their other divisions (TV technology, camera technology, etc.) into these mobile devices, such as Sony’s Xperia. Most of these devices run various versions of Android. Because of the OS customizations performed by the mobile device manufacturers, the demonstrated devices were running different versions of the Android OS with uncertain plans for migration to V4 (the latest version). The introduction of Amazon’s Fire at $199 before the holidays demonstrated that there is tremendous demand for devices at that price point. Most of the tablets introduced at CES will be priced between $199-250. Nokia’s Loomia 900 Windows phone was also introduced to positive reviews. We’ll have see whether it provides the push that Microsoft needs in this area. The smartphone screens are getting larger because, according to the phone manufacturer representatives I spoke to, most consumers run entertainment-based applications. This year also saw the introduction of “ultrabooks,” extremely light (3-3.5 lbs) running Windows. These products have many of the attributes of tables, i.e., long battery life, instant on, solid state memory, better graphics, but with the power of a PC. Along with Windows 8, they may provide another opportunity for Microsoft to rejuvenate its ecosystem.

Smart TVs. More gesture-based and voice-based interfaces (Microsoft’s Kinect influence) and more connected TVs (built mostly on a Google platform) running as many applications as we typically see on mobile devices or use the cloud to have content streamed to them. Tablets and smartphones are now connectable to these Smart TVs to enhance interactivity with the device and consumer interactions through the social web. At the end of 2011 there were 82 million connected TVs in homes worldwide and by 2016 it is projected that number will increase to 892 million. Content consumption through applications or through streaming over the internet can change consumer viewing patterns. Consumers will no longer be subject to the formats, choices and content pricing imposed by cable and satellite TV operators. Instead such operators may be relegated to simple internet providers rather than content providers.

Health monitors. The number of such devices introduced in this year’s show rivaled the number of new TVs. Zeo, Fitbit, BodyMedia, Tanita, iHealthLabs, Striiv, Motorola and Qualcomm were some of the companies that introduced new such devices to measure heart functions, weight, glucose levels, calorie count, sleep patterns, activity levels, etc. and several of them include gamification concepts in order to better motivate the wearer. Unfortunately, each creates its own data silo with the data it captures.

Investment Implications

The choices among the available mobility form factors (smartphones, mini-tablets, tablets and maybe even ultrabooks) are so many that consumers and enterprise users will have a hard time selecting the right device for their needs. The OS variations among the Android-based mobile devices will start presenting problems to application developers who typically decide whether to try to optimize an application for a particular device and form-factor. During CES Google announced that it wants Android developers to focus on application consistency and is now requiring they make the stock Google experience available to developers on their phones in order to carry a link to the Android Market. As a result, application developers may start using HTML5 more aggressively in order to address application consistency and portability. The use of gesture- and voice-based interfaces will also make application development more complex.

The OS variability among the mobile devices will also challenge corporate IT infrastructures in companies that allow their employees to bring their own devices. These companies will need to adopt or develop solutions that provide easy ways for “fitting” enterprise applications to the available devices and offer strong device management capabilities.

The increasing use of mobile devices, including ultrabooks, will further accelerate cloud adoption by the enterprises for the provision of content and services, e.g., storage, training, etc.

Based on Android’s adoption as the platform for both next-generation mobile devices and next-generation interactive TV sets, online and in-app advertising will remain the major means for monetizing the content and applications. Advertising solutions that have already been deployed on desktops and Android-based mobile devices are expected to transfer easily to the new TVs. Some content will continue to be monetized through subscriptions (see Hulu’s progress during 2011).

The health sensors being deployed are creating large quantities of data that must be captured, securely moved to and stored in the cloud, managed and hopefully analyzed. We will see a strong consumer need for personal dashboard and BI solutions that automatically integrate, analyze and appropriately present the information extracted from the data collected by each device. In other words there will be strong need to break down the data silos now being created by these devices. Once such integration and analysis of the data is achieved, consumers would want to start linking this data with their electronic medical records and perform additional correlations and analyses.

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Managing Director at Trident Capital focusing on investments in Internet and software businesses.
Prior to entering venture capital, Evangelos had more than 20 years experience in high-technology industries, in executive roles spanning operations, marketing, sales and engineering.
Evangelos earned a PhD in computer science from Brandeis University and a BS in electrical engineering from Caltech.